April 8, 2013

The Braintrust Misquotes A Democratic Senator!

By advocating tripling the federal minimum wage at a committee hearing, U.S. Sen. Elizabeth Warren, D-Mass., removed all doubt about her ignorance of basic economics — which a new study confirms.

She thinks productivity gains mean the $7.25-an-hour minimum wage should be about $22 an hour.

If we (and they) wanted to present this issue fairly (and we do), we'd (and they'd) actually quote what Senator Warren said. So this is what we'll do - something Braintrust didn't - we'll get you her actual words. This is from the Huffingtonpost:

"If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour," she said, speaking to Dr. Arindrajit Dube, a University of Massachusetts Amherst professor who has studied the economic impacts of minimum wage. "So my question is Mr. Dube, with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn't go to the worker."

Read that again. She's not "advocating tripling the minimum wage" as much as she's asking a somewhat rhetorical question about the growth of productivity over the last 5 or so decades. And she's making the point that despite the stagnating level of the minimum wage over the last few decades, workers have produced more - which is to say more money for their employers.

That is what she was saying. By squeezing what she said into how she's "advocating" raising the minimum wage, the Braintrust is using a so-called "straw man" argument, though appy-polly loggies to my droogs for the gendered metaphor.

By all of these benchmarks, the value of the minimum wage peaked in
1968. If the minimum wage in that year had been indexed to the official
Consumer Price Index (CPI-U), the minimum wage in 2012 (using the
Congressional Budget Office’s estimates for inflation in 2012) would be
at $10.52. Even if we applied the current methodology (CPI-U-RS) for
calculating inflation – which generally shows a lower rate of inflation than
the older measure – to the whole period since 1968, the 2012 value of the
minimum wage would be $9.22.

Using wages as a benchmark, in 1968 the federal minimum stood at 53
percent of the average production worker earnings. During much of the
1960s, the minimum wage was close to 50 percent of the same wage
benchmark. If the minimum wage were at 50 percent of the production
worker wage in 2012 (again, using CBO projections to produce a full-year
2012 estimate), the federal minimum would be $10.01 per hour.

A final benchmark for the minimum wage is productivity growth. Figure
2 below compares growth in average labor productivity with the real
value of the minimum wage between the late 1940s and the end of the
last decade. Between the end of World War II and 1968, the minimum
wage tracked average productivity growth fairly closely. Since 1968,
however, productivity growth has far outpaced the minimum wage. If the
minimum wage had continued to move with average productivity after
1968, it would have reached $21.72 per hour in 2012 – a rate well above
the average production worker wage. If minimum-wage workers received
only half of the productivity gains over the period, the federal minimum
would be $15.34. Even if the minimum wage only grew at one-fourth the
rate of productivity, in 2012 it would be set at $12.25.